September 2007

Turkey and World Merchandise Trade In year 2005 ; Top 3 countries with the largest export size, Germany, USA, China Turkey; with 73,4 billion USD acquires %0,7 of world-wide export Turkey’s rank in world-wide export is 34 Source: WTO REPORT 2006

Turkey and World Merchandise Trade In year 2005; Top 3 countries with the largest import size; USA, Germany, China Türkiye with 116,6 billion USD acquires %1,1 of world-wide import Turkey’s rank in world-wide import is 23 Source: WTO REPORT 2006

World-Wide Merchandise Trade Textile + Clothing 2004 : %5 2005: %4,7 Source : DTM (2005) Change 2005 Rate Agricultural Products788,10851,908% Fuel and Mining Products1.284, ,5036%17% Iron & Steel270,70318,2018%3% Chemicals983, ,1012%11% Other Semi-Production Industry643,60710,8010%7% Machinery and Vehicles3.530, ,409%38% Textile195,40203,004%2% Clothing259,20275,606%3% Other Productin Industry1.003, ,509%11% Grand Total8.958, ,0013%100%

Turkish Textile and Clothing Sector Textile Large/ Medium Size Companies Capital Intense Approx companies Info/Infrastructure Highly Equipped Institutionalized Employee  Business Size and Export Performance Clothing Small/ Medium Size Companies Labour Intense big-little companies Less Equipped Flexible, Fast Decisions 2,5 million Employee

Textile’s Importance in Turkish Economy Share in GNP % 7,8 Share in Industry % 19,9 Share in Production % 18,4 Share in Total Employment % 13,6 Share in Industry Employment % 23,9 Source: calculated by DPT, DIE ve SSK data

Textile and Clothing’s Contribution to GNP from the Foreign Trade Perspective Source: Calculated by DTM Data Billion USD

Turkey’s Textile + Clothing Export TOTAL EXPORT TEXT + CLOTH. EXP T+C YEAR(billion $) Share % ,8 10,0 36, ,3 10,4 33, ,1 12,2 33, ,3 15,1 32, ,2 17,6 27, ,1 18,9 25, ,8 19,6 22, ,8 14,7 22,1 Source: DTM, İTKİB

Turkey’s Textile + Clothing Export

Turkey’s Textile and Clothing Export’s Proportion to Total Export

EU25,USA vs. Turkey,China EU25 Textile Import million USD China ; million USD; %18,7, 1. rank Turkey;3.395 million USD; %16,2, 2. rank EU25 Clothing Import million USD China; million USD ; %24,4, 1. rank Turkey; million USD; %14,9, 2. rank USA Textile Import million USD China; million USD, %22,3, 1. rank Turkey; 655 million USD,%3,2, 9. rank Kaynak : DPT Ongut Report 2005 Data

Turkey Export Clothing Mostly to : 1. Germany million USD 2. UK million USD 3. USA million USD 4. France 969 million USD 5. Holland 887 million USD 6. Spain 751 million USD 7. Italy 658 million USD First 7 Total : million USD (% 72) Total Export : million USD Kaynak : İTKİB 2006 Evaluation Report

Turkey Export Textile Mostly to : 1. Italy 588 million USD 2. Russia 485 million USD 3. Germany 356 million USD 4. Romania 324 million USD 5. Bulgaria 247 million USD 6. Poland 231 million USD 7. England 230 million USD First 7 Total : million USD ( %44) Total Export : million USD Kaynak : İTKİB 2006 Evaluation Report

Cost Composition in Textile Products Source ITKIB Sector Research

Cost Composition in Clothing Products Source ITKIB Sector Research

Input Price Index YIL Cotton Yarn Index Synthetic Yarn IndexUSD IndexEuro Index Minimum Wage Index ,2114,687,396,9114, ,4 87,4105,5145, ,3133,88290,9159, ,6165,288, ,5 Source: TGSD Pres./Ahmet Nakkaş

World Short- Staple Spindle Capacity (.000)% % % % % India % % % % % China % % % % % Pakistan5.0983%8.2815%8.3335%8.4385% % Indonesia4.2003%6.5004%7.0504%7.0785%8.0004% Thailand2.8002%4.0002%4.0952%3.7192%3.8132% Other Asia % % % % % Total Asia % % % % % Africa7.6275%8.0585%7.7655%7.1345%6.2283% East Europe8.4565%6.7104%5.6813%5.0313%4.9403% West Europe %7.2654%6.2564%5.7884%3.7842% Turkey3.9002%4.2193%5.3823%5.4654%6.4183% Russia %4.3063%3.5532%3.3902%1.7041% Brazil5.7503%9.0005%6.5004%5.5234%4.4982% USA %6.2614%4.5273%3.7062%1.4301% Other8.9065% % % %9.4745% Total % % % % % Source: ITMA 2006 Report

East Europe Short-Staple Spindle Capacity (.000)% % % % % Italy % % % % % Spain % % % %2236% Portugal % % % %86023% Greece %80011%87714%87715%68218% Germany %6799%4878%4878%2667% France7667%4096%2775%2775%722% UK6616%2774%1312%1312%1303% Other %93813%4818%4818%3469% Total % % % % % Source ITMA 2006 Report

Sectoral Strategies : Parameters of Competition In Production CountriesCorporate Tax Rate Governmental Employment Burdens over Base Pay Average Labour Cost Base Pay USD / Hour Energy Prices Industry KWH/USD Romania1621,01,600,96 Albania2330,71,100,65 Egypt2025,00,850,21 Uzbekistan ,00,600,25 Poland1941,93,800,7 China3335,00,600,55 India33,716,80,670,8 Bangladesh37,50,00,280,4 Tunisia3521,82,050,45 Vietnam2817,00,280,35 TURKEY3042,82,881,07 Source Ufuk 2015 Pres./Dr. Can Fuat Gürlesel

Turkish Textile’s Strenghts 1. High Capital Investment 2. Fast Delivery 3. Proximity to EU Market 4. Product Variety 5. Well-Educated, Entrepreneur Executives 6. Infrastructure of Transportation

Turkish Textiles’ Weaknesses 1. High Bank Loan Rates 2. High Labour Cost 3. High Public Burden 4. Expensive, energy, communication, transportation 5. Not Having Brands

Investment Incentives ( ) Source :HM

Investment Incentives ( ) Total : Billion USD Source : HM

Turkey 2005 Spindle Capacity 2005 Ring Capacity ; Short Staple Long Staple Total Ring Capacity OE Rotor Capacity ; Source ITMA 2006 Report

Turkey 2005 Weaving Capacity 2005 Weaving Capacity Shuttle - Less ; Shuttle ; Total Cotton-Yarn Weaving Filament Weaving Wool Weaving Source ITMA 2006 Report

Business Strategies : There will be 3 types of business in the sector Business TypeConnectionCompetition Elements Business having brands in both domestic and international market Direct contact with domestic and international customers/consu mers “ GLOCAL “ Brands Owner Direct Sales via shops in homeland, abroad Design Collection Fashion Brand Goods produced by contract manufacturers Quality- Price Competition Medium- Large Scale Supplies producing to global brands and buyers Direct contact with Foreign wholesaler / Retailer / Buyer Design Collection Capacity Flexible small parties, Fast Production Ability Both produce and use contract manufacturers Cost/Price – Quality Competition Small – Medium Scale Domestic Contract Manufacturers Direct contact with domestic suppliers Effective, Efficient, Quality Production Flexible, Small Party, Fast Production Small – Medium Scale Cost/Price Competition Kaynak Ufuk 2015 Pres./Dr. Can Fuat Gürlesel

Business Strategies; There will be 4 ways of transformation TRANSFORMATIONSOLD WAYNEW WAY PRODUCTIONHIGH CAPACITY MASS PRODUCTION FLEXIBLE, SMALL PARTY PRODUCTION DESIGNSUPPLIER AND CONTRACT MANUFACTURER PRODUCTS VALUE ADDED, BRANDY PRODUCTS MARKETTINGPASSIVE MARKETTINGACTIVE MARKETTING BRANDSUPPLIER AND CONTRACT MANUFACTURER PRODUCTS BRAND OWNED PRODUCTS Source Ufuk 2015 Pres./Dr. Can Fuat Gürlesel